Farm Tender

Reducing your selling costs - Do your sums

By Kelsey Miller, Stocka Director

Like many things in business, until you see it on paper in front of you its often easy to put aside and worry about other things that feel more pressing but in actual fact have less impact on your returns.

I reckon this is often the case when it comes to selling livestock. Many of the farmers i speak with know it can be a costly exercise to sell their livestock, but havent always taken the time out to understand the impact it has on their income.

If you fit into that bucket or its been a while since you took a good look at your costs a good place to start is to just do a simple calculation based off last seasons sales.  

For example (keeping it simple) say you sold 100 weaners @ $1000 bucks a head on average, you make $100,000. If you sold via the sale yards you can pretty easily estimate your selling costs, for many producers this will add up to around 10% or $10,000.

As a rule of thumb many small business farms run at a profit margin of say 20-30% so in this case you would yield say $30,000 in profit. Doesnt take long to get a sense that of how much that $10,000 impacts your profit margin.  

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Finding a way to reduce your selling costs by half (saving of $5K) would help to boost your profit by over 15%, an improvement any business i have worked in would take any day of the week.

The question i ask you to consider is this....do you know how much it costs you to sell your livestock. If not it might be worth a cup of tea with a piece of paper and a calculator to do your sums.......